MCLAUGHLIN MINE, Calif. - Homestake Mining Co." s Ray Krauss ambles along the banks of a lake his firm built to supply water to its McLaughlin Mine in Northern California. He talks glowingly about his 17 years as manager of environmental affairs.

First he got permits for the cyanide-process gold mine just 70 miles north of San Francisco. Then he saw the mining through without serious incident, and even received accolades from the Sierra Club, the Soil Conservation Society, and Oregon's High Desert Museum.

He did more than simply avoid disasters. Krauss says the mine improved the land around it. The mining company has cleaned up three abandoned mercury mines, removed cows from most of the 11,000-acre site, and collected two decades of baseline scientific data.

But most significant are the company's efforts at reclamation: Native oaks now grow atop waste-rock dumps and the mine has kept its heavy metals from worming their way into the downstream food chain.

"McLaughlin is an environmental showcase," says Mike Steeves, Homestake's director of investor relations. "It's the one we tend to show off."

"It's interesting how 200 acres of mine pit can support 10,000 acres of (nature preserve)," boasts Krauss. The numbers might be a stretch - counting the processing facilities, the ratio is more like 10 to 1 - but the principle is thought-provoking. Homestake has channeled about one of every 40 operating dollars into environmental efforts, amounting to some $2 million a year when ore was still being extracted and waste rock piled for burial.

Before Homestake, no one was clamoring to plug the hundred-year-old mercury mine tunnel that was channeling acid drainage into Davis Creek, or to remove the processing waste from 19th century mercury retorts, which have discharged heavy metals into local streams. Homestake found it easier to clean up the previous miners' mess than to argue about whether the mercury was coming from the old workings or from its new mine.

It is this enlightened approach that has earned Homestake the respect of figures such as University of Nevada Professor of Environmental and Resource Sciences Glenn Miller and of organizations including the Mineral Policy Center. "They're at the top of the heap right now in terms of major mining companies," Miller says, "but that still isn't saying a whole lot." And when the Mineral Policy Center prepared "report cards' on various mining firms in 1992, says senior research associate Carlos Da Rosa, Homestake walked away with the most positive one. The Mineral Policy Center's recent book, Golden Dreams, Poisoned Streams, says the McLaughlin Mine "demonstrates that hardrock mines can be both profitable and environmentally responsible."

Scientists also give the McLaughlin Mine high marks. For more than a decade, Professor Peter Connors of the University of California Bodega Bay Marine Laboratory has studied the California roach in the streams that drain the waste rock sites. He doesn't hold the mine responsible for any heavy metal concentrations in the fish. "Natural conditions and variations explain the variation in their populations," he says.

The California Native Plant Society's Joe Callizo has been tracking rare plants such as the serpentine sunflower and adobe lily near the mine and has seen "very little encroachment" from Homestake's activities. "When we've seen the occasional tire track or fallen fence, we've reported it, and Homestake has fixed it immediately," Callizo says. Indeed, most of Homestake's 10,000 acres seem more like a gently used ranch than a mine, covered in a mosaic of woodland, rolling grassland and chaparral.

Given the mine's location just 20 miles from the Napa Valley wine country, it's not surprising that Homestake chose to make this its premier effort at land stewardship when it sought approval for the mine in the early 1980s.

"California is a more populated area," says Da Rosa. "There's a greater degree of environmental sensibility, so they had to respond to that."

Frances Burke had moved to nearby Rumsey just a few years before, having come from more urbanized Santa Cruz "for peace and quiet," she recalls. Add to that the fact that her orchard's irrigation water comes from Cache Creek, downstream of Homestake's main reservoir, and she felt she had to make a stand. But "when we realized we couldn't make them go away, we worked hard to make the regulations as strict as possible."

Neighbors like Burke kept close tabs as the mining company sought the 327 permits it needed to operate. Homestake engineers designed a system for ore and water to be mixed in a slurry which is piped four and a half miles away from the mine site, to a location where tailings would present less of a threat. Homestake also chose to process the ore in tanks, rather than by piling it into huge heaps and doing the leaching on the ground. Waste rock dumps were designed with settling ponds to contain surface runoff and with clay caps to surround deposits of acid-bearing rock. The dirt roads were to be watered to keep down the dust raised by moving 100 million tons of rock over the lifetime of the mine.

Even so, there have been surprises, one of which demonstrates the adage that it is possible to drown in a pool whose average depth is one inch.

Homestake chemists analyzed the waste rock and concluded that a mere 7 percent of it had more acid-generating potential than the alkalinity of the rock itself could neutralize. But the rock behaved differently in nature than in the laboratory, fracturing along quartz planes, and exposing fresh pyrites which oxidized to quickly release sulfuric acid, Homestake environmental engineer Dean Enderlin said. This pulse of acidity is long gone downstream before the rest of the rock releases its buffering minerals.

Thanks to this phenomenon, the amount of rock needing to be contained more than quintupled, says Krauss, from 7 percent to 40 percent. Homestake adapted by isolating the geochemically active rock in thick clay liners capped with 15 feet of clay and five feet of soil.

Since then, Homestake has traveled a relatively smooth road. Senior engineer Bill Marshall, a 13-year veteran of the Central Valley Regional Water Quality Control Board, characterizes the mine's environmental record as "pretty good," marred only by occasional violations of heavy metals limits downstream of the waste rock sites. Most of these occurred when the sediment ponds were overwhelmed by runoff. Now, a mine pump diverts the water away from the stream.

With all the ore mined and the refining facilities set to close in a few years, some ambiguities in the enterprise are coming into sharper focus. Even state-of-the-art mines leave a trail of risk that will last well into geologic time.

Observers worry that the clay waste-rock containment will eventually fail, or that the supposedly impermeable tailings pond will leak. For these reasons, the University of California would decline any offers to own the site outright, says Elizabeth Riddle, acting director of the university's Natural Reserve System. With a lease or license to conduct research on the site, however, Riddle says the university would be eager to expand its research base there beyond the 300 acres it already manages.

Though the McLaughlin Mine has had its lapses, it shows what a mining company can do. And that puts Homestake and the industry in a somewhat awkward position. Homestake spokesman Steeves is reluctant to compare McLaughlin with the heap-leach operation his company plans to open this year in Ruby Hill, Nev. The environmental protections that Homestake builds into its mines depend on a host of site-specific conditions, he hedges. But he concedes that state-of-the-art mining evolves in conjunction with the demands of the local citizenry.

"Nevada is a mining state, where gold mining generates significant employment and tax base," he says. "If you're in a desert, and not a person lives within a hundred miles of the site, the permit process will be simpler."